Management Information Chapter -18

1) Which of the following is non-financial information?

1. Customer preferences
2. Trends
3. Seasonal changes
4. Creditors
a) Only 1 and 2 above
b) 1, 2 and 3 above
c) Only 4 above
d) all of them

2) What is relationship between data and information?

a) Processed data is called information.
b) Data are raw materials for data processing.
c) Data are facts and figures are not apparently meaningful.
d) All of the above.

3) Which of the following is NOT a purpose of management information in a company?

a) to provide records of current and actual performance
b) to compare actual performance with planned performance
c) to help management with decision making
d) to inform customers about the company’s products

4) A marketing manager receives a sales report in the first week of April, July, October and
January which shows the actual sales of each product by market sector for each of the
previous three months. The marketing manager reviews the company's advertising
monthly. Which attribute of the information provided by the sales report is
unsatisfactory from the marketing manager's prospective?
a) Its reliability
b) Its completeness
c) Its timeliness
d) Its accuracy

5) Which of the following items of information might be produced by a management

accounting system?
a) Income tax deducted from employees’ wages and salaries
b) Amounts of money owed to suppliers
c) Current bank balance
d) Profitability of product items

6) Which of the following would be data rather than information?

a) Sales increase/decrease per product in last quarter
b) Total sales value per product
c) Sales made per salesman as a percentage of total sales
d) Salesmen’s commission as a percentage of total sales

7) The cost accountant has provided information about the actual and budgeted cost of the
materials used in production in the last month. This information will primarily aid
management in which of the following areas?
a) Planning

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b) Implementing
c) Control
d) Decision making

8) Consider the following statements:

1. Management accounts are prepared for both external and internal users
2. Management accounts are governed by legislation
3. Management accounts focus on specific areas of an organization’s activities
Which of the following statements is/are correct?
a) 2 and 3 only
b) 1 only
c) 3 only
d) 1 and 2 only

9) A large company consists of seven major product divisions. Each division makes and
sells a different range of products and the head of each division is responsible for setting
sales prices and the marketing budget for the division, as well as production and selling
costs. Head office provides a number of supporting services to each product division,
and head office controls all decisions relating to capital expenditure and borrowing.
Although the product divisions operate independently, some divisions also sell goods to
other divisions? For the purpose of planning, performance measurement and control,
the most appropriate responsibility accounting arrangement would be to treat each
product division as a:
a) Revenue center
b) Cost center
c) Profit center
d) Investment centre

10) Which of the following explains responsibility accounting?

a) A system where an individual accepts responsibility for the preparation of accounts
b) A system of reporting in which budgets and budgetary control are allocated to individual managers
c) A system which gives priority to people rather than money
d) A system of accounting where parts of the accounting function are allocated to individual managers

11) Which of the following statements are correct?

1. Strategic information is mainly used by senior management in an organization.
2. Productivity measurements are examples of tactical information.
3. Operational information is required by its main users.
a) (i) and (ii) only
b) (i) and (iii) only
c) (ii) and (iii) only
d) (i), (ii) and (iii)

12) Reginald is the manager of production department M in a factory which has ten other
production departments. He receives monthly information that compares planed and
actual expenditure for department M. After department M, all production goes into
other factory departments to be completed prior to being dispatched to customers.
Decisions involving capital expenditure in department M are not taken by Reginald.
Which of the following describes Reginald’s role in department M?

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a) A cost center manager

b) An investment center manager
c) A revenue center manager

13) Which of the following is NOT correct?

a) Cost accounting can be used for inventory valuation to meet the requirements of internal reporting
only.
b) Management accounting provides appropriate information for decision making planning, control
and performance evaluation.
c) Routine information can be used for both short-term and long-term decisions.
d) Financial accounting information can be used for internal reporting purposes.

14) The following statements relate to financial accounting or to cost and management
accounting:
1. Cost accounting is part of financial accounting and establishes costs incurred by as organization.
2. Financial accounts are historical records.
3. Management accounting is used to aid planning, control and decision making.
Which of the statements are correct?
a) (i) and (ii) only
b) (i) and (iii) only
c) (ii) and (iii) only
d) (i), (ii) and (iii)

15) Which of the following is correct?

a) Qualitative data is generally non-numerical information.
b) Information can only be extracted from external courses.
c) Operational information gives details of long-term plans only.

16) The manager of profit center is responsible for which of the following?
1. Revenues of the center
2. Cost of the center
3. Assets employed in the center
a) (i) only
b) (ii) only
c) (i) and (ii) only
d) (i), (i) and (iii)

17) Which of the following would be best described as a short-term tactical plan?
a) Reviewing cost variance and investing as appropriate
b) Comparing actual market share to budget
c) Lowering the selling price by 15%
d) Monitoring actual sales to budget

18) The following statements refer to strategic planning.

1. It is concerned with quantifiable and qualitative matters.
2. It is mainly undertaken by middle management in an organization
3. It is concerned predominantly with the long term.
Which of the statements are correct?
a) (i) and (ii) only

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b) (i) and (iii) only

c) (ii) and (iii) only
d) (i), (ii) and (iii)

19) The following statements related to responsibility centers

1. Return on capital employed is a suitable measure of performance in both profit and investment
centers.
2. Cost center are found in manufacturing organization but not in-service organization,
3. The manager of a revenue center is responsible for both sales and cost in a part of an organization.
Which of the statements are incorrect?
a) (i) and (ii)
b) (ii) and (iii)
c) All of them

20) The following statements refer to qualities of good information

1. It should be communicated to the right person.
2. It should always be completely accurate before it is used.
3. It should be understandable by the recipient.
Which of the above statements are correct?
a) (i) and (ii) only
b) (i) and (iii) only
c) (ii) and (iii) only
d) (i), (ii) and (iii)

21) Which of the following is/are primary sources of data?

1. Historical records of transport costs to be used to prepare forecasts for budgetary planning
2. The Annual Abstract of Statistics, published by the Office for National Statistics in the United
Kingdom
3. Data collected by a telephone survey to monitor the effectiveness of a bank's customer services
a) (i) and (ii)
b) (i) and (iii)
c) (i) only
d) (iii) only

22) The sales manager has prepared a manpower plan to ensure that sales quotas for the
forthcoming year are achieved. This is an example of:
a) Strategic planning
b) Tactical planning
c) Operational planning
d) Corporate planning

23) Which of the following statements is/are correct?

1. A management control system is a term used to describe the hardware and software used to drive
a database system which produces information outputs that are easily assimilated by
management.
2. An objective is a course of action that an organisation might pursue in order to achieve its strategy.
3. Information is data that has been processed into a form meaningful to the recipient.
a) (i), (ii) and (iii)
b) (i) and (iii)

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c) (ii) and (iii)

d) (iii) only

24) Which of the following costs would be considered to be the responsibility of the manager
of a profit center?
1. Direct labour
2. Variable production overhead
3. Imputed interest on capital invested
4. Depreciation on machinery
a) 1 and 2 only
b) 1, 2 and 3 only
c) 1, 2, 3 and 4
d) 3 and 4 only

25) The essence of systematic sampling is that:

a) Each element of the population has an equal chance of being chosen
b) Members of various strata are selected by the interviewers up to predetermined limits
c) Every nth number of the population is selected
d) Every element of one definable sub-section of the population is selected

26) A firm which bottles shampoo selects some filled bottles for examination. The
procedure used is that two random numbers, x and y are chosen. Starting at the X the
bottle filled, every bottle at an interval of y is then chosen for examination. This type of
sampling is known as:
a) Multi-stage
b) Random
c) Systematic
d) Stratified

27) The following statements are often made about ‘simple random sampling’
1. It ensures a representative sample
2. It eliminates selection bias
Which of the following is always true?
a) 1 only
b) 2 only
c) Both 1 and 2 only
d) Neither 1 nor 2

28) An accountant has to check a sample of invoices. The invoices are divided three groups,
by value as follows: under £100, £100 - £500, and over £500. Samples are than selected
randomly from each group. Which ONE of the following sampling methods is involved?
a) Cluster
b) Multi-stage
c) Quota
d) Stratified

29) A sample of 10% of CAT students is required. Which ONE of the following methods will
provide the best simple random sample?
a) Select every tenth CAT student to arrive at their college/institute on one specific day

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b) Select randomly, using random number tables, one in ten of every CAT class
c) Select 10% of colleges/institute providing CAT courses, then from these choose all students who
are registered with CAT
d) Select 10% of all students registered with CAT, giving each a chance of 0.1 of being picked.

30) The following table shows that the typical salary of part qualified accountants in five
different regions of England.
TYPICAL
AREA
SALARY £
South-east 21,500
Midlands 20,800
North-east 18,200
North-west 17,500
South-west 16,700
The best diagram to draw to highlight the differences between areas is:
a) A pie diagrams
b) A multiple bar charts
c) A percentage component bar chart
d) A simple bar charts

31) In a responsibility accounting system which of the following costs is least likely to
appear on the performance report for the foreman of a production department?
a) Cost of direct labour
b) Rent of machinery
c) Repairs of machinery
d) Cost of materials

32) The cost of materials for product A are as follows;

Material W: $2,250
Material X: $3,000
Material Y: $3,600
Material Z: $150
If the material proportions were displayed on a pie chart, how many degrees would
material Y represent?
a) 90 degrees
b) 120 degrees
c) 144 degrees
d) 204 degrees

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